County says delegation's plan flawed

February 14, 2000|By SCOTT BUTKI

A stadium funding plan drawn up by state lawmakers wouldn't begin paying down Washington County's $52.3 million water and sewer debt for at least nine years, according to a county analysis of the plan.

County Administrator Rodney Shoop said an alternative might be to use the money raised through the local delegation's plan to subsidize bills for the county's estimated 8,000 water and sewer customers.

That alternative is included in a document prepared by Shoop and Budget and Finance Director Debra Bastian. The County Commissioners are expected to discuss that document for the first time today.

Under that plan, the average water customer would save about $40 a year, Shoop said. Rates would still increase, but not by as much as projected without the subsidy.

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The local delegation to the Maryland General Assembly is seeking the best way to attack the county's $52.3 million water and sewer debt, Del. Christopher B. Shank, R-Washington, and Delegation Chairman Del. Robert A. McKee, R-Washington, said Monday.

The delegation probably will vote on part of its plan Wednesday, McKee said.

Under the lawmakers' plan, the county's hotel-motel tax would double from 3 percent to 6 percent, bringing in about $923,578 a year. A portion of that money could be used to finance a new baseball stadium. Some of the funds would go to organizations the county currently funds, freeing a corresponding amount of money to be applied against the sewer and water debt.

"My primary goal has always been water and sewer debt reduction, quite frankly, wherever we get the biggest bang for the buck," Shank said.

Shoop, however, is suggesting tackling the rates instead of the debt.

The original version of the state plan required the Washington County Commissioners to put about $400,000 a year into a fund to be used to pay off the county pre-treatment plant's $9.3 million debt.

Under that plan, any future pre-treatment plant profits would be used to stabilize or reduce water and sewer rates.

But due to the nature of the bonds issued to build the plant, the county can't pay off pretreatment loans for almost 10 years, Water and Sewer Director Gregory Murray said.

About $7.8 million of the bonds can't be paid off until 2009 and the other $1.8 million can't be paid off until about 2015, Murray said.

It doesn't make sense to raise the money and then not use it for almost 10 years, Murray said.

Commissioner William J. Wivell said, however, it will take nine years to raise the funds to retire most of the debt, and suggested the county could use interest earnings to subsidize rates.

After Commissioners President Gregory I. Snook told the delegation about the bond restrictions, legislators changed wording in the proposed legislation from "pretreatment reduction fund" to "sewer debt reduction fund," McKee and Shank said.

The county document contains two alternate suggestions. One calls for using almost $400,000 to subsidize residential rate increases.

A second calls for using the money to pay for the county share of state-mandated biological nutrient removal changes at the Conococheague Wastewater Treatment Plant. The cost is estimated at $6.8 million with the state paying about 50 percent of the costs.

That would free up enough money to reduce projected sewer rate increases by 1.1 percent per year for the next nine years, the document says.

The county expects to have to impose rate hikes of 3 percent to 5 percent each year for about 10 years, but the size of the rate increases could be held to 2 percent to 3 percent if the money were used for that purpose, Murray said.

Shoop said those two ideas aren't necessarily the best.

"There are people smarter than me who can come up with other approaches, too," Shoop said.

Wivell said he prefers the legislators' plan because it tackles the debt, not the rates. It also would enable the county to retire most of the pretreatment debt in 10 years instead of 25, he said.

Wivell said he continues to oppose taxpayer funding of a stadium.

"If you just use the money to subsidize rates, it is just going out. You're not building up a fund, you are not reducing the debt earlier and you are not foregoing interest payments," Wivell said.

Shank said he is not convinced that the lawmakers' plan won't work and he wants to discuss the matter further with other delegation members and the County Commissioners before altering it again.

"The question is do you want to see your water and sewer rates lowered or would you rather have the debt paid off quicker?" Commissioner Paul L. Swartz said. "And we need to hear which direction county and city residents would like to go."